If a company sells its product but gives the buyer the right to return it, the company should not recognize revenue until the sale is collected.

Question

Quizplus · Accepted Answer

Revenue can be recognized at the point of sale even if the buyer has the right to return the product, provided the company can estimate the returns reliably and meets other revenue recognition criteria under applicable accounting standards (e.g., IFRS 15 or ASC 606).

If a Company Sells Its Product but Gives the Buyer